‘Creeping distrust’: our anxiety over China’s influence is hurting Chinese-Australians



According to new research, discrimination against Asian-Australians is widespread. The way we talk about China is part of the problem.
Erik Anderson/AAP

James Laurenceson, University of Technology Sydney

Last week’s Asian-Australian Leadership Summit in Melbourne saw the release of valuable new survey data on the discrimination some Australians face.

A survey conducted by the Australian National University’s Centre for Social Research found that 82% of Asian-Australians reported they had experienced discrimination. This was the highest among all the self-identified ethnic groups in the study, and compared with just 34% for Anglo-Australians.

In his welcoming address to the summit, ANU Chancellor and former Foreign Minister Gareth Evans made particular mention of the predicament Chinese-Australians currently find themselves in. He warned that “hyper-anxiety” about “baleful Chinese” was

making it harder than it has ever been for Chinese-Australians to aspire to leadership positions, or indeed any position at all in fields that are seen as even remotely security-sensitive.

One attendee, Chinese-Australian businessman Jason Yat-sen Li, remarked,

I hear anecdotal stories of people who work for big companies, or work for government, who are just feeling this sort of creeping distrust.

Many Chinese-Australians connect this “creeping distrust” to the tone of the broader concerns around “Chinese influence” at the moment.

Another summit attendee, Jieh-Yung Lo, said,

Unfortunately Chinese-Australians have become collateral damage in the foreign influence debate and as a result, some, including me, have had our loyalty and commitment to Australia repeatedly questioned.

When reasonable questions become insinuations

The Australian Security Intelligence Organisation (ASIO) has consistently warned since 2017 that the threat Australia faces from “foreign interference” – defined as activities that are covert, deceptive and/or coercive – is “unprecedented”.

Last month, retiring ASIO Director-General Duncan Lewis went so far as to say he considered it an “existential threat” to Australia.

Last week, these concerns led to many questions being directed at Gladys Liu, Australia’s first and only “Chinese-born” member of parliament. (Liu was actually born in Hong Kong and has never been a citizen of the People’s Republic of China.)

Prime Minister Scott Morrison leaped to Liu’s defence when questions about her ties to associations with direct or indirect links with the Chinese Communist Party (CCP) were raised – first in the media, and then in parliament.




Read more:
Why Gladys Liu must answer to parliament about alleged links to the Chinese government


But shouting “racism”, as Morrison did, is inaccurate. There is nothing racist about scrutinising an Australian MP’s previous connections. But it becomes problematic when reasonable questions are cast as insinuations and allegations – about a citizen’s loyalty, for example – that run ahead of the evidence.

And one of the most prominent groups in Australian society calling for tougher push-back against foreign interference has been the Chinese-Australian victims of CCP operations abroad.

Gladys Liu’s ties to organisations with connections to the Chinese Communist Party have come under question.
Mick Tsikas/AAP

The ‘China influence’ narrative

As our anxiety over foreign interference has intensified, it’s also had an impact on the way China – and Chinese-Australians – are discussed and viewed by the public. As a group of China academics has noted, the media, in particular, have sometimes taken a sensational approach that has led to a “racialised narrative of a vast official Chinese conspiracy”.

In today’s commercially challenging media landscape, China scare stories sell newspapers and generate clicks. Even the publicly funded ABC is not immune. As China media scholar Wanning Sun noted:

Over the past few years, the ‘China influence’ narrative, which manifests in a multitude of political, social and cultural issues, has grown to dominate the Australian news media’s coverage of China. In this context, the ABC has conspicuously failed to set a broader agenda.




Read more:
Why do we keep turning a blind eye to Chinese political interference?


Until this week, major media outlets such the Sydney Morning Herald and the ABC were tagging their reporting around these serious issues under the banner of “Chinese influence”. Only in recent days did they finally switch to “CCP influence” and “China power”.

Similarly, last year, academic Clive Hamilton wrote a bestselling book with a cover that warned of a “Silent Invasion” owing to “China’s influence”.

The consequences of such loose talk – when CCP interference is the real problem – can alienate Australians born in China or those of Chinese ethnicity. Worse, they can be seized upon by racist groups and individuals as justification for their views and to incite hatred.

How Asian-Australians experience discrimination

Recent research has shown that Australians of Asian backgrounds were the most frequent victims of race-motivated hate crimes.

In the ANU survey, discrimination against Asian-Australians was reported as occurring in a host of environments, such as at shops or restaurants. Perhaps most troubling, though, was that two-thirds of Asian-Australian respondents said they suffered discrimination in the workplace.




Read more:
Asians out! Not in this suburb. Not in this apartment


More than half said that discrimination, or the fear of discrimination, had changed the way they acted at work. The most common reactions were to be less outspoken and adopt a more submissive work style.

The consequences of this sometimes unconscious bias are far-reaching. Previous studies, for example, have shown that Asian-Australians only comprise 1.6% of chief executive officers of ASX200 companies, federal government ministers, heads of federal and state government departments and vice-chancellors of universities.

This pales in comparison to their 12% share of the Australian population.

More responsible reporting on Gladys Liu

All of this makes it critical that politicians, journalists and commentators are precise in their language and balanced and rigorous in their assessments and analysis.

Consider the Gladys Liu case again. The questions about Liu relate to her being “associated” with organisations that are “linked” to the CCP. But as China analyst Ryan Manuel observes,

no-one has alleged that Ms Liu herself, nor the Liberal Party she belongs to, holds any communist sympathies.

Last weekend, an ABC report made much of a motion proposed by Liu’s Liberal Party branch in 2017 to make it easier for foreign investors to buy Australian agricultural land and agribusinesses by raising the threshold needed for Foreign Investment Review Board (FIRB) scrutiny.

But what it didn’t say was that the motion was entirely in keeping with the agenda of the Business Council of Australia (BCA), not the CCP. In 2015, when the Abbott government was considering lowering the thresholds, the BCA openly fought the change on the basis that

it increases costs, brings uncertainty and leads to a chilling effect on investment.

Moreover, the motion proposed by the branch Liu belonged to said nothing about changing the threshold for scrutiny faced by companies owned by the Chinese government. (Under current regulations, every single investment proposal from a foreign, state-owned company has to be approved by the FIRB, no matter how small.)

And how exactly owning an Australian dairy farm or fruit processor would constitute a vector of CCP interference that could potentially undermine Australian sovereignty is a mystery.

But this is precisely the type of reporting we need to avoid – lacking context and firm evidence – to avoid mischaracterising Chinese-Australians.The Conversation

James Laurenceson, Acting Director and Professor, Australia-China Relations Institute (ACRI), University of Technology Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Advertisements

New research shows vast majority of Hong Kong protesters support more radical tactics



The biggest difference between the current protest movement and the 2014 Umbrella Movement is the striking solidarity among the various groups of demonstrators. Everyone feels they are ‘in the same boat’ together, new research shows.
Roman Pilipey/EPA

Samson Yuen, Lingnan University

Three months on, there’s still no end in sight for the Hong Kong protest movement. What started as a demonstration against a bill to amend the city’s extradition laws has now morphed into a broader movement challenging the legitimacy of the government and seeking fundamental political reforms.

Every weekend, hundreds of thousands of protesters – sometimes more than a million – are still taking to the streets. The protests draw Hong Kongers from all walks of life: students, doctors, lawyers, journalists, teachers, civil servants, and, most recently, family members of police officers. The discussions on internet forums and encrypted messaging apps remain vibrant, with innovative ideas for new protest actions emerging frequently.

To better understand who the protesters are, as well as why and how they are protesting, I’ve conducted a series of large onsite surveys at 19 demonstrations since June 9, with the help of researchers from other universities. We have so far surveyed more than 8,000 protesters with a response rate of over 85%.

What the protesters are angry about

Our data show protesters tend to be young and highly educated. On average, half of our respondents are aged between 20 and 30. Around 77% said they had a tertiary (higher) education.

Few said they were unemployed, unlike protesters in other mass demonstrations around the world, like the Arab Spring uprisings and Spain’s Indignados movement.




Read more:
Like ‘shooting water’: why the Hong Kong government must accept that compromise is the only way forward


Most respondents identified themselves as either democrats or localists. However, in the early stages of the protests, it is also notable that nearly 30% of respondents said that they were centrists or had no political affiliations. This dropped to around 15% by early August.

When asked why they were protesting, the vast majority of respondents (more than 90%) cited two main motivations: the complete withdrawal of the controversial extradition bill and an independent inquiry into excessive use of force by police against the protesters.

Interestingly, from July onwards, police violence has become a more pressing concern for respondents, with those who see it as “very important” rising from 85% to over 95%. Protesters have also increasingly said they are fighting for Hong Kong’s democracy, with those who see it as “very important” rising from 83% to 88%.

The resignation of Chief Executive Carrie Lam and other major officials was considered the least important reason for protesting. This suggests that a change in leadership is not viewed as a solution to the political crisis – unlike in 2003, when half a million people marched against changes to Hong Kong’s national security laws and demanded the resignation of then-leader C.H. Tung.

Instead, the protesters are seeking a fundamental reform of the entire political system.

For many of them, the extradition bill is just the surface of a rotting system. It merely exposes the underlying problems that have been swept under the carpet for many years: the lack of democratic representation in the policy-making and legislative process, the declining accountability of the government, the blatant domination by a small clique of business and pro-Beijing elites, the increasing unimportance of public opinion, and the steady encroachment on people’s political rights and civil liberties.

Most of the Hong Kong protesters are young, well-educated and employed.
Roman Pilipey/EPA

Strong solidarity and acceptance of radical tactics

These same long-standing problems are what prompted the Umbrella Movement in 2014. But unlike the Umbrella protesters, who were intensely split over protest tactics, the current protest movement is exhibiting much stronger solidarity and resolution in achieving their demands.

The majority of respondents see themselves as “in the same boat” (that is, sharing the same fate) with one another. More 80% believe the protests should go on if the government refuses to offer anything other than the suspension of the bill. Among them, more than half support escalating the protests.

This extraordinary level of solidarity is striking. Part of this is because people have learned from the mistakes of the Umbrella Movement. Instead of pointing fingers at each another, protesters are this time using the phrase “do not split, do not sever our ties” to deal with conflicts. Misdeeds and transgressions are not condemned, but are now dealt with through collective reflection and friendly reminders.




Read more:
Trust Me, I’m An Expert: Why the Hong Kong protesters feel they have nothing to lose


Fuelling protesters’ solidarity is their strong feeling of desperation. Our survey results show the majority of respondents do not expect any concessions from the government. This has remained steady from early on in the protests, and explains the emergence of slogans like “I want to perish together”.

We also found a high tolerance for the more radical and militant tactics of some of the younger protesters, even among those who consider themselves moderates.

Consistently, over 80% agree that peaceful assembly should combine with confrontational actions to maximize the impact of protests. In June, slightly less than 70% agreed that radical tactics were understandable when the government refuses to listen. That percentage rose to over 90% in the August 4 protests.

Where the protests are heading

No one knows what the “endgame” of the Hong Kong protests will be. The government is now hoping that mass arrests, coupled with the new start of the school year and the possible introduction of emergency regulations, may clear out the streets in the next few weeks, ideally before China’s National Day celebrations on October 1.

The strategy may work, but likely only in the short run. If the Hong Kong government continues to refuse to heed what people are legitimately asking for, the people will undoubtedly return to the streets.




Read more:
Why Chinese and Hong Kong students clash in Australia: the patriotic v the protest movement


As research from other social movement studies has taught us, protests take place in cycles. The current protest movement in Hong Kong may eventually quiet down after a while, but another one may be brewing on the horizon.


The other researchers in the team include Francis Lee from the Chinese University of Hong Kong, Gary Tang from Hang Seng University of Hong Kong, and Edmund Cheng from the City University of Hong Kong.The Conversation

Samson Yuen, Assistant Professor of Political Science, Lingnan University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Why Chinese and Hong Kong students clash in Australia: the patriotic v the protest movement


Christine Cunningham, Edith Cowan University; Clive Barstow, Edith Cowan University, and Wei Zhang, Edith Cowan University

The protests in Hong Kong have led to some open clashes here in Australia between students from mainland China and others from Hong Kong.

There were angry scenes between pro-China and pro-Hong Kong groups in Sydney and Melbourne, as well as at universities in Brisbane and Adelaide.

These clashes are troubling for the Australian university sector, which enrols 182,555 mainland Chinese and 11,822 Hong Kongers as international students at various education institutions.




Read more:
Trust Me, I’m An Expert: Why the Hong Kong protesters feel they have nothing to lose


Our current research suggests differences in the curriculum studied by mainland Chinese and Hong Kong students may help to explain the beliefs underpinning the protest movements.

Our research involved in-depth interviews of a random sample of more than a dozen international postgraduate students from mainland China who are studying, or very recently have been, at Western Australian universities.

The interviews took place in late 2018 – before the recent Hong Kong protests. We asked the participants about their experiences studying in Chinese schools where Moral Education is a compulsory subject.

Lessons in China

The Moral Education curriculum teaches Chinese children to be politically proud of the Chinese Communist Party (CCP) and loyal to the ideals of a One-China worldview.

Moral Education is a stand-alone subject and also embedded within other subjects, such as history and Chinese literacy studies. Moral Education starts being taught in the early years of schooling and continues throughout high school and during undergraduate university studies.

In primary school, all Chinese children are supposed to join the Young Pioneers, a 130 million-strong youth organisation controlled by the CCP.

In high school, teachers invites students who achieve highly academically and morally to join the Communist Youth League. In university, excellent students are invited to join the Communist Party.

In contrast, Hong Kong students do not study Moral Education and cannot join the Young Pioneers, Youth League or the Communist Party.

When East meets West

Preliminary indications from our interviews suggest that when mainland Chinese students arrive in Western countries for postgraduate studies they carry with them a moral duty to uphold their national identity. This identity is arguably constructed through the Moral Education lessons.

The following are translated Mandarin quotes from participants in our study. Each quote comes from a different student, but we have de-identified them to protect their identity. They are talking about their experiences of studying Moral Education in their primary and high school years:

I was taught to love our motherland and love our country. It’s the right thing to do.

We were taught many slogans that were inspirational, positive and patriotic. It taught us to love our country, our family and our society.

In secondary school Moral Education made us all feel we are part of one China and what the government is doing is to give us a better life.

We are also learning from our interviews that even after mainland Chinese students study in Western universities for several years, they are unlikely to change their previously learnt ideological positions.

I think although the Communist Party is a one-party dictatorship, because in a big country like China it is very difficult to apply democracy and maintain the sustainability otherwise it will be too chaotic.

When I was standing under the party flag and sworn in to join our Communist Party it was so exciting. After so many years of ideological and political education, I believe that the Communist Party is the most advanced organisation of our society.

Now, especially when we are living overseas, if you hear the Chinese national anthem it brings me to tears of pride, belonging and identity.

Sympathy for the Communist Party

Another phenomenon our interviews revealed is that many of our participants expressed strong sympathy towards the CCP government.

That holds even after they learn about facts and events that have been censored in China, including the 1989 Tiananmen Square massacre.

I will most likely participate (in) rallies like welcoming President Xi’s visit to Australia because I am […] Chinese and I have a sense of belonging and responsibility attached to this Chinese identity. I also will be vocal about protecting China’s sovereignty.

China is a big country with a large population and there are still many people who are not well educated, therefore they are easy to be incited by others. Although the one party is never 100% perfect, it at least proved itself that most people in China have a good life under its leadership.

Isolated in Australia

Over the course of three interviews with each participant in our study, we discovered many Chinese international students feel isolated from Australian friendship circles.

They expressed concern at the lack of opportunities to truly engage with Australian students during their time living here. Many worry that local Australian students just aren’t interested in them.

Actually I have little knowledge about how Australian society works – aside from the common social norms. I don’t know where I can access such knowledge. Some locals take it for granted that we should have known this, but we really don’t as we grew up in a totally different place.

For me I tend to have the impression that the local students believe we Chinese students are not interested in talking to them, so they would not take the initiative and talk to us either. I suggest that our university can do more about it like organising activities so we could access local friendships.




Read more:
Australian universities can’t rely on India if funds from Chinese students start to fall


International education should be a two-way transaction, deep in its engagement and fluid in its ability to change as we change.

But what these interviews show is the strong feelings many students from mainland China have about their country and government, which perhaps explains why they feel anger towards those who protest against that way of life.

The growing trend of these Chinese graduates returning to their homeland for work opportunities also has a bearing on their continuing patriotism and sense of national identity.The Conversation

Christine Cunningham, Senior Lecturer in Educational Leadership, Edith Cowan University; Clive Barstow, Professor of Creative Arts / Executive Dean Arts & Humanities, Edith Cowan University, and Wei Zhang, PhD candidate, Edith Cowan University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Beijing is moving to stamp out the Hong Kong protests – but it may have already lost the city for good



Beijing has a long-term Hong Kong challenge on its hands, one that in many ways is of its own making.
Miguel Candela/EPA

Adam Ni, Macquarie University

Since the start of mass demonstrations in Hong Kong in early June, there has been a significant escalation of Beijing’s rhetoric and tactics. Instead of addressing the root causes of the public anger, Beijing has demonised the protesters and threatened to suppress them with its military.

Beijing’s shrill rhetoric, misinformation campaigns, and blatant threats have galvanised resistance in what has fast become a volatile situation. The crisis doesn’t appear to be dissipating. And things are going to come to a head very soon.

The mass protests started in response to a controversial extradition bill that was widely seen as another step in the erosion of Hong Kong’s autonomy. The demonstrations quickly escalated due to public anger over police violence and an unresponsive Hong Kong government.

But deeper down at the heart of this crisis is a conflict over the longer-term vision for the city – over its soul.




Read more:
The Hong Kong protesters have turned militant and more strategic – and this unnerves Beijing


Beijing’s goal is to gradually tighten its grip on Hong Kong. It aims to assimilate the city into China’s authoritarian political system, and rule over its people in the same way it does in rest of the country. Many Hong Kongers, meanwhile, are desperate to resist any further encroachment by Beijing on their freedoms and way of life. These goals are fundamentally incompatible.

In many ways, this is a problem of Beijing’s own making. It created the conditions for the current crisis by systematically undermining the “one country, two systems” framework.

A show of force: military trucks parked near the Hong Kong border.
Alex Plavevski/EPA

Beijing has effectively torn up its promises, made before the British handover, to keep Hong Kong’s political system intact until 2047. In recent years, it has undermined the “one country, two systems” framework through political interference, the changing of electoral and other laws, and the penetration of Hong Kong’s social institutions.

In doing so, it has provoked local resentment, a stronger Hong Kong identity, and a culture of resistance. According to a recent poll, the percentage of Hong Kongers identifying as Chinese is now at its lowest point since the handover in 1997.

For the ruling Chinese Communist Party, this is worrisome. And the longer the protests continue, the more it sees its authority challenged. Such resistance, in Beijing’s view, cannot be tolerated.

Beijing’s multi-pronged strategy

In the early days of the protests, Beijing adopted a low-profile approach that focused on censoring news of the demonstrations from filtering into mainland China. This approach, however, changed quickly when the Chinese government realised the protests would likely continue and it needed to mobilise public opinion.

What is Beijing’s aim now? In the short-term, it wants to end the unrest by shutting down the protests completely. It has repeatedly signalled its willingness to use force if necessary.




Read more:
Hong Kong fears losing its rule of law; the rest of the world should worry too


Beyond that, given what has transpired over the last ten weeks of demonstrations, Beijing will seek to tighten its political control over Hong Kong even further to check continued resistance.

In order to achieve its immediate and long-term goals in Hong Kong, Beijing has put in place a multi-pronged strategy. A full picture of this strategy has emerged in recent weeks:

1) First, Beijing is firmly backing the embattled Hong Kong authorities. Chinese officials have repeatedly urged the Hong Kong police to adopt tougher tactics against protesters who they see as criminals.

And in the last week, we have seen an alarming escalation in police violence, with tear gas and rubber bullets being used with increasing frequency.

2) Beijing is also ramping up its influence operations in Hong Kong to solidify support among pro-establishment elites, businesses, and other “patriotic forces”.

Last week, the State Council’s Hong Kong and Macau Affairs Office and Beijing’s liaison office in Hong Kong held a consultation forum with about 500 pro-establishment figures in Shenzhen, just across the border.

The key message was that the Chinese government was fully behind them and that their fate was tied to Beijing. This has had an immediate impact on the ground in Hong Kong, with the city’s billionaires “breaking their silence” this week and calling for the protesters to stand down.

Not with a small degree of irony, Beijing and its proxies in Hong Kong have a close relationship with the city’s organised crime groups. On several occasions in the last two months, these groups have assaulted protesters on Beijing’s behalf in an attempt to instill fear in the local population.

3) Beijing has stepped up its propaganda and misinformation efforts against the protesters in an attempt to cast them as villains in the unfolding drama. Criminal elements are also working with nefarious foreign agents to foment turmoil and undermine China, the official line goes.

Within mainland China, such blatant twists of truth are widely believed. And because Beijing has successfully mobilised public opinion there, that makes it harder for the government to back down and make compromises (not that we are seeing signs of that).

In any case, Beijing’s relentless war for hearts and minds continues.

4) Beijing is using punitive measures to cut off support for the protesters. For instance, the Chinese government ordered the Hong Kong-based airline Cathay Pacific to block staffers who took part in the protests from working on flights to the mainland.

It did this to deliver an unequivocal message: support the protesters and we will hit your bottom line. Beijing will likely continue to target Hong Kong and international companies that it sees as being on the wrong side of the political crisis.

5) Beijing is trying to deter escalating protests by signalling its strong determination to intervene with force if necessary.

The Chinese government has repeatedly threatened the use of armed forces as a backstop measure if the unrest spins out of control. Indeed, it may at some point make the judgement the situation warrants military intervention, regardless of the high cost involved.

Beijing’s posturing is intended to send a deterrent message and is part of a wider psychological campaign against the protesters. But we are not at the point of imminent military intervention yet.

6) Despite the unrest, Beijing will likely accelerate its efforts to integrate Hong Kong into the mainland economically and through infrastructure projects. High-speed trains, new bridges, and economic cooperation are all part of this long-term effort. We are also likely to see a further tightening of control over the city’s political institutions, judicial system, and media.

A festering long-term problem

For Chinese leaders, the protest movement has reinforced an important lesson: insufficient government power, civil liberties, and perceived weakness leads to the loss of control, resistance, and social instability.

This will only serve to strengthen Beijing’s resolve to assert its control over Hong Kong more forcefully, which will, in turn, provoke further resentment and resistance from locals.




Read more:
Hong Kong: how a more assertive British government can uphold the ‘one country, two systems’ formula


To be sure, Beijing has a long-term Hong Kong challenge on its hands. If it wants to resolve the current impasse, hardline tactics are not sufficient. As unpalatable as it is to both sides, Beijing and the protesters must compromise. But there is little prospect of that in the current environment of escalating violence, inflamed passions, frayed nerves, and hardening attitudes on both sides.

But Beijing must recognise that its actions are sowing the seeds of future conflict, just as its past broken promises led directly to what we are witnessing today. As Hong Kong gallops towards tragedy, it is both mesmerising and heartbreaking to watch.The Conversation

Adam Ni, China researcher, Department of Security Studies and Criminology, Macquarie University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Morrison needs to take control of China policy – but leave room for dissent



The Morrison government is at risk of losing control of China policy at the most critical time in Australian history.
AAP/EPA/Thomas Peter/pool

Tony Walker, La Trobe University

The Morrison government is at risk of losing control of China policy. Push-back from within its own ranks is complicating its ability to manage relations with Beijing. China policy is being subjected to a buffeting from hawkish backbenchers who would like to see Canberra adopt a harder line.

Let’s dispose first of straw man arguments about whether Liberal backbencher Andrew Hastie was within his rights to warn of threats to national sovereignty by a rising China that is ruthlessly advancing its own interests.

Hastie has every right to raise alarms about China’s behaviour in his capacity as a member of parliament and chair of the joint parliamentary committee on intelligence and security. He was given opinion space in Nine newspapers to do so.




Read more:
View from The Hill: It’s not in the ‘national interest’ for the backbench to shut up about China


However, he was ill-advised to use a reference to Nazi Germany to advance his argument about a China threat. Hastie may not have likened China to the Third Reich explicitly, but by referencing France’s inability to withstand German aggression he was implicitly making the link.

This is what he said:

The West once believed that economic liberalisation would naturally lead to democratisation in China. This was our Maginot Line. It would keep us safe, just as the French believed their series of steel and concrete forts would guard them against the German advance in 1940. But their thinking failed catastrophically. The French failed to appreciate the evolution of mobile warfare. Like the French, Australia has failed to see how mobile our authoritarian neighbour has become.

Invoking Nazi Germany or the Holocaust to advance an argument is treacherous terrain at the best of times, unless the author is clamouring for attention.

One wonders how much notice Hastie’s commentary would have attracted if there had been no reference to the inadequacies of France’s Maginot Line.

It’s reasonable to speculate that his contribution would have gone the way of those written by other China hawks in the so-called national security establishment, many of whom have converted their hawkishness on China into a cottage industry.

One other point might be made about Hastie’s contribution. It is simply not correct to say, as he did, there was a general expectation China would continue to democratise and in time become more like us.

This is a flawed and naive point of view.

China’s ruthless suppression of the Tiananmen Square democracy protests in 1989 was not an aberration. It was consistent with its behaviour since it began opening to the outside world in the late 1970s.




Read more:
Thirty years on, China is still trying to whitewash the Tiananmen crackdown from its history


Its 1979 suppression of a Democracy Wall movement, and the arrest of prominent dissidents including human rights activist Wei Jingsheng, now in exile, attest to a regime’s ruthlessness in stifling dissent.

Beijing’s tolerance of Hong Kong’s pro-democracy protests will be viewed through a prism of what these might portend for the mainland. If there is any indication of contagion across borders, China will react forcefully, and may do so anyway if disturbances continue.

Before addressing what might be an appropriate response from the Australian government to an eruption of anti-China sentiment on its own backbench, perhaps it would be useful to define the challenges at play.

In its latest manifestation, China is no longer a status quo power. It is one that is seeking expand its power and influence in what it regards as its own sphere of influence in the Asia-Pacific, broadly defined to include the southwest Pacific.

These attempts to assert itself are not simply restricted to the militarisation of geographical features in the South China Sea. They also involve pursuit of an economic, diplomatic and propaganda offensive that is designed to advance Chinese interests at home and abroad.

In seeking to promote these interests, Beijing is an indefatigable exploiter of opportunities and weaknesses. If there is a rule of thumb in dealing with China in this latest phase, it is that it will seek to get away with what it can on many different fronts.

In that sense, Hastie has a point: Australia cannot simply adopt a passive response to Chinese single-mindedness in pursuit of what it perceives to be its own interests.

The question, then, becomes what to do?

This is where it becomes crucial that the Morrison government settles on a clearly defined strategy to deal with a disruptive China. What this should involve is a combination of a hedging strategy in partnership with Australia’s allies to balance Beijing’s militarised ambitions, and a separate one in which Australia’s own economic and diplomatic interests are asserted.

The government’s task will be to tread a fine line between security arrangements with its allies, principally the United States, and a relationship with China that is defined by Australia’s own interests and not those of anyone else.

In a thoughtful speech to Asialink before the G20 Summit in Osaka in June, Morrison outlined what appeared to have the makings of a “Morrison doctrine” on how to steer a course in treacherous waters between Australia’s security and economic lifelines.

The prime minister argued for a more activist diplomatic role in the region, aimed at securing Australian national interests in what are choppy waters. He said:

We should not just sit back and await our fate in the wake of a major power contest.

Australia could do worse than pursue an Asian equivalent of the Helsinki Accords that helped keep the peace in Europe during the Cold War.

This is a time for creative Australian diplomacy, not running off to Washington to hide behind America’s petticoat.

This returns us to the Hastie intervention and the national interest question.

Just as Hastie is entitled to express a personal point of view, so does the government of the day have a responsibility to assert what is in the national interest.

Clearly it is not in the national interest for political leaders to disregard comments that might have a negative impact on relations with Australia’s pre-eminent trading partner. China absorbs one-third of Australia’s merchandise exports.

This is what the prime minister had to say:

… the government is fully aware of the complexity that is involved in our region and the challenges that we face in the future… And we are careful as a government to ensure that we don’t seek to make them any more complex than they need to be. And that is what Australians can count on. We will be measured. We will be careful and we will put Australia’s national interest first.

Morrison needs to assert this point of view more forcefully if he is to avoid losing control of China policy. These is nothing inherently inconsistent between a national interest argument and one that enables dissident voices to have their say.

After all, this is not China.The Conversation

Tony Walker, Adjunct Professor, School of Communications, La Trobe University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Hong Kong fears losing its rule of law; the rest of the world should worry too



A Hong Kong pro-democracy protester on 11 August 2019.
Miguel Candela/EPA

John Garrick, Charles Darwin University

What’s happening in Hong Kong right now has direct bearings on Australia. It goes to an issue crucial to our position in a world economic order that is likely to be shaped less by the United States, still our most important ally, and more by China, our ever more valuable trading partner.

At the heart of the Hong Kong protests is the same issue that causes concern about China’s ambitions from the South China Sea to the South Pacific. It’s about the Chinese government’s commitment to an idiosyncratic idea of the rule of law.

Hong Kong has something like a constitution or bill of rights, called the Hong Kong Basic Law. It’s a legacy of British colonial rule, which the Chinese government agreed to preserve because there was value in keeping Hong Kong the prosperous city it had become.

China has a very different approach to law. Its constitution can and has been changed at the whim of the ruling party. There is no separation of powers, and no such thing as an independent judiciary.

Removing the judicial firewall

The trigger for the Hong Kong protests was a proposed law enabling China to extradite Hong Kong residents and visitors. Protesters foresaw democrats and dissidents disappearing into China’s prison system. The judicial “firewall” giving meaning to the notion of “one country, two systems” would be fatally undermined. Hong Kong’s distinctive culture and economy would be destroyed with it.




Read more:
The Hong Kong protesters have turned militant and more strategic – and this unnerves Beijing


The idea of law as an instrument of the Chinese Communist Party shapes the Chinese government’s domestic policies, and also its approach to international law. It respects international conventions when it has to, and when it is in the national interest. But there’s a point where it is quite willing to thumb its nose at the whole idea.

This willingness has stiffened under the leadership of Xi Jinping, who has reaffirmed in word and deed that the Chinese Communist Party “is the highest force for political leadership”.

Law of the sea

An example is China’s view of the United Nations Convention on the Law of the Sea in its dispute with the Philippines over island territory in the South China Sea.

In 2016 a UN tribunal unanimously found in favour of the Philippines. China refused to accept the verdict. It declared it “would continue to abide by international law and basic norms governing international relations”, but also added:

The Chinese government reiterates that, regarding territorial issues and maritime delimitation disputes, China does not accept any means of third party dispute settlement or any solution imposed on China.

It therefore continues to claim the South China Sea as an “inalienable” part of its territory. In direct defiance of the ruling, it has also built artificial islands within the Philippines’ exclusive economic zone, and built military bases on those islands.

Wider implications

China’s official narrative is that it doesn’t reject international law per se, but simply wants law that accommodates “Chinese characteristics”, including China’s preference for resolving disputes one on one.




Read more:
Australians’ feelings sour towards China: Lowy poll


Given that the point of establishing the United Nations and other multilateral institutions such as the World Trade Organisation was to replace “might makes right” with something like an international rule of law, this is likely to prove cold comfort for smaller nations.

As Xi told the 19th National Congress of the Chinese Communist Party in 2017:

  • the overall goal of “comprehensively advancing law-based governance” is to “establish a system of socialist rule of law with Chinese characteristics and build a country of socialist rule of law”

  • “major country diplomacy with Chinese characteristics aims to foster a new type of international relations and build a community with a shared future for mankind”

  • the defining feature of “socialism with Chinese characteristics” is “the leadership of the Communist Party of China”.




Read more:
Australia has too few home-grown experts on the Chinese Communist Party. That’s a problem


Beijing’s view of the rule of law is thus very different to what most of the rest of the world understands. The potential consequences are not lost on the citizens of Hong Kong, and they should not be lost on China’s neighbours and trading partners.The Conversation

John Garrick, University Fellow in Law, Charles Darwin University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Chinese propaganda goes tech-savvy to reach a new generation



As younger Chinese become increasingly addicted to their mobile devices, the government’s propaganda offices have had to rethink their strategies.
Roman Pilipey/EPA

Wanning Sun, University of Technology Sydney

Earlier this year, a new app was launched in China to put the patriotism of Chinese citizens to the test.

Named “Study Xi to Strengthen the Nation”, the app quizzes users on all things related to President Xi Jinping – his policies, activities, achievements, theories and thoughts. Users can earn points and win prizes for correct answers and compete with colleagues and friends to see who knows the most about China’s leader.

The app is the latest example of a rethink by the Communist Party when it comes to its propaganda efforts and how best to justify the legitimacy of its one-party rule, extol the virtues of the party, and promote patriotism to an audience of young, tech-savvy Chinese.

For those institutions responsible for the production of effective propaganda, this is a real challenge. After all, propaganda in the 21st century has to go beyond forcing people to sit in study sessions on Friday afternoons, read the People’s Daily newspaper, or watch China Central Television (CCTV) in group meetings.




Read more:
Extremist mobs? How China’s propaganda machine tried to control the message in the Hong Kong protests


From sermons to ‘indoctritainment’

Thanks to a number of developments, the old propaganda messages of previous generations can easily be repackaged for millennials. Like the rest of the world, Chinese millennials are keen adopters of the latest mobile technologies and suffer from short attention spans. They are also just as enthusiastic as their Western counterparts about posting jokes, music videos and short, sharp, attention-grabbing memes on social media.

The Chinese government, meanwhile, is putting more of an emphasis on humanising its approach to leadership. Politicians are keen to be seen as relatable rather than authoritative figures.

So, to get its messaging across in a new way, party propaganda has morphed from dry sermons to what I like to call indoctritainment. And these campaigns are often high-end productions.

Increasingly, ideological messages are more effective if they are delivered using a platform that’s already been trialled and proven in marketing. In 2016, for instance, CCTV launched a promotion of the Communist Party in the form of a public awareness advertisement to mark the 95th anniversary of the founding of the party.

The one-minute video, titled “I am a Chinese Communist Party member,” features heartwarming vignettes of individuals from different walks of life – teacher, cleaner, surgeon, policeman, local public servant, fisherman – who are all good Samaritans doing their bit to help others.

The message is clear: the party is being re-branded as an organisation made up of unsung heroes. As the voice-over explains:

I am the first one to arrive, I am the last one to leave, I’m the one who thinks of myself the least, and cares about others the most … I am the Chinese Communist Party, and I am always there with you.

Another video promoting the Chinese military, “I am a Chinese soldier”, demonstrates the point. Even without the English subtitles, it’s not hard to see what the producers were going for: a patriotic Hollywood movie or romantic tear-jerker.

The pop culture treatment, with American accents

Another tactic is the use of popular culture as a way of conveying sometimes dense or dull Chinese government policies, especially if the intended audience is global.

In 2015, a video called “The 13 what” used catchy pop music, colourful animation, and American-accented English to explain China’s 13th five-year national plan.

Channelling David Bowie, Monty Python and the psychedelia of the 1960s, the three-minute video was produced by a digital media production team operating under the auspices of the government’s main propaganda offices in Beijing.

Two years earlier, the same studio also produced the widely circulated five-minute video clip, “How leaders are made”. Xi Jinping appears in the clip as a cartoon character, as do US President Barack Obama and British Prime Minister David Cameron.

Light-hearted, zany, and (again) featuring American English, the video informs viewers that Xi has worked long and hard to move up China’s political ladder. The implication is that Xi’s power is just as legitimate as that of his Western counterparts.

Within a short period after its release, the video had been viewed more than a million times on Youku, China’s version of YouTube.

Propaganda by way of screen bullets

Increasingly, the Communist Party’s propaganda material goes viral only after it appears on popular video-sharing websites with “bullet screens”. This is an interactive feature that enables viewers to “shoot” text comments across the screen as the video is being streamed. It’s very popular with younger audiences.

One of China’s biggest bullet screen platforms is Bilibili, often referred to as “the B site”.

The site used to be occasionally shut down for streaming what the government considers “morally unsound” material.

To stay on the party’s good side, Bilibili now plays host to a wide suite of propaganda produced by CCTV or the Chinese Department of Propaganda. In 2015, the Communist Youth League of China also began to hold regular courses on the site aimed at promoting patriotism among young people.

But how effective is it?

Just how successful these strategies have been is still not entirely clear. While the “Xi Jinping thought” app has captured the imagination of many outside China, party members who have been encouraged – in some cases requested – to download the app seem less than enthusiastic.

And some of these new propaganda efforts have backfired and attracted cynical responses online, even ridicule.




Read more:
Xi Jinping’s grip on power is absolute, but there are new threats to his ‘Chinese dream’


But judging by the many comments viewers have left on the B site, it seems fair to conclude that some of the tactics have had the intended effect of endearing the party and its leaders to the young and impressionable.

This is a reminder of how naïve it is to assume that technologies are inherently democratising, and that digital disruption is likely to spell the end of communism in China. Such assumptions still permeate most Western media stories about the Communist Party’s new propaganda strategies, but this is clearly not the case.

As the party’s propaganda strategies become more nuanced and sophisticated, so should our frameworks for understanding them.The Conversation

Wanning Sun, Professor of Media and Cultural Studies, University of Technology Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.

View from The Hill: It’s not in the ‘national interest’ for the backbench to shut up about China


Michelle Grattan, University of Canberra

Trade minister Simon Birmingham on Sunday weighed into the debate over Andrew Hastie’s warning about China rise. Birmingham said colleagues in future should ask themselves two questions before speaking out on “sensitive foreign policy matters”.

These were: “Is the making of those comments in a public way necessary? And is it helpful to Australia’s national interest?”

On a narrow view, the warning by Hastie – the chairman of the powerful parliamentary committee on intelligence and security – about Australia not being alive enough to the dangers of an ever more powerful China was not “necessary”; nor was it particularly helpful to a government trying to manage a relationship that gets more complicated all the time.

But the idea that backbenchers should not voice considered views on such a major long term issue for this country shows a certain contempt for parliamentary democracy.

Birmingham, speaking on the ABC, said: “There are a range of ways in which any of us can contribute and we can do that with direct discussion with ministers and with leadership in backbench committees and other ways”.

Decoded, the message to the backbench was: boys and girls, when in public just follow the talking points we give you.

Amid the noisy chatter and clatter of our current politics, serious foreign policy discussions among politicians are relatively rare. But the broad community debate grows ever stronger about China and its implications for Australia – including the now-great power’s trajectory, our dependence on it economically, its reach into this country (including through investment and our educational institutions), and how we juggle our respective relationships with it and the United States.

New Liberal backbencher Dave Sharma entered the China debate at the weekend, with a robust thread of nearly a dozen tweets, in support of Hastie.

A former senior diplomat, Sharma is more steeped in foreign policy than most on the frontbench.

“Hastie is right to ring the bell on this issue, and to warn that our greatest vulnerability lies in our thinking, which is Panglossian at times,” he wrote.

Significantly, Sharma also supported Hastie’s comparison with France’s failure to comprehend properly the rise of Germany before World War 2.

“In WW2, we failed to realise early enough that German ambitions could not be accommodated. National Socialist Germany was not a status quo power, but we mistook it as such, or deceived ourselves that it was,” Sharma wrote.

Hastie’s reference to Germany had been sharply condemned on Friday by Senate leader Mathias Cormann, who said it was a “a clumsy and inappropriate analogy.”

But Hastie was verballed over his invoking of Germany. He wasn’t saying the Chinese and Nazi regimes were the same – he was talking about the underestimation of the threats they posed to other countries.

Hastie could have drawn another parallel – with the failure of countries in the 1930s to fully appreciate the looming threat from Japan.

Sharma noted that rising powers inevitably cause convulsions – “the challenge is to accommodate a rising power IF it is sufficiently status quo in nature that it can be accommodated. This was the thesis with China for much of the early 2000s,” Sharma wrote.

“But if the rising power is revisionist in nature, and cannot be accommodated within the existing order – because it fundamentally does not accept the legitimacy of that order – then the future becomes much tougher”.

Given it was clear China’s ideological direction and ambition had become “far more pronounced” under its current leadership, “our strategy and thinking needs to reflect this shift, which is basically Hastie’s point – that we need to remove the blinkers from our eyes, recognise reality for what it is, and act accordingly,” Sharma said.

“This does not mean we should not be pursuing a constructive and positive relationship with China – we should be. Nor does it compel us to make a ‘choice’. But we need to be honest with ourselves about the challenges of managing this relationship and what might lie ahead.”

Of course Australian government policy in the last few years has been reacting to what has been seen as a heightening Chinese threat – even while the government has often been unwilling to admit as much.

The Pacific “step up” is all about China. So was the legislation, enacted by the Turnbull government, against foreign interference. The exclusion of Huawei from the 5G network was an unequivocal message. Australia’s intensified efforts to counter the cyber security threat have China front of mind.

The Chinese predictably reacted with annoyance to Hastie’s comments. But they are much more attuned to the actions Australia has taken and continues to take – measures which have been and are in the national interest. That’s the basic reason why Australia-China relations are strained.

The government’s trying to shut down backbench contributions to this debate is less a matter of the “national interest” than an exercise of attempted control of its MPs in its own interest. In fact it might be counter-productive for the national interest, which may require the Australian public to acquire a much better understanding than they have now of what could be increasingly difficult times and decisions in the years to come.The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

The China-Trump trade war has spread to Australia. We’re now at risk of global currency war



The Australian dollar has already slipped, falling to its lowest point against the US since the global financial crisis.
Shutterstock

Hui Feng, Griffith University

When US President Donald Trump announced via Twitter on Friday that he was slapping tariffs on an extra US$300 billion of China’s exports, it was widely expected that China’s currency would slide against the US dollar.

What wasn’t expected was that on Monday it would break the seven Chinese renminbi (RMB) to the dollar barrier, a line held by China since 2008.

The RMB/USD exchange rate is tightly managed by the People’s Bank of China. The rate is permitted to move only 2% away from a midpoint fixed by the bank each day.

Although in its official statement the bank attributed the slide mainly to changes in demand and supply, the slide would not have happened had the bank not allowed it. In the past it spent as much as US$107 billion in a single month defending the renminbi.




Read more:
Will Trump’s trade war with China ever end?


It is more reasonable to believe that the devaluation was a deliberate decision taken to offset the effect of the punitive tariffs.

By making China’s exports cheaper in US dollars it will neutralise the effect of Trump’s decision to impose tariffs that would make them more expensive.

But it will have far-reaching implications, so far-reaching as to suggest that Beijing has run out of alternatives.

In part, China is hurting itself…

The exchange rate – the external price of money – affects almost everything, including inflation in China itself, which will receive a boost as imports to China become more expensive.

Chinese inflation is already on the rise due to disruptions in supply of food staples such as pigs.

There isn’t much the People’s Bank of China can do to restrain inflation. Pushing up interest rates might choke the economy given that China’s GDP just posted its smallest quarterly gain since 1992.

It would also make it even more difficult for already heavily indebted state-owned enterprises and local governments to make payments on their debt.

If the Chinese think the currency is going to continue to fall they’ll attempt to take their money out of the country while it still has buying power.

Although the People’s Bank of China has demonstrated its capacity to control capital flight, it has increasingly had to do it using harsh measures that harm legitimate trade and investment.

The devaluation will essentially act as tax on net importers, which in China are households. This means it will work against China’s goal of rebalancing the economy away from investment to private consumption.

…and endangering global recovery

An RMB that breaches seven is also bad news for the global economy. It means weaker demand from China, which will depress global economic growth.

In that way it can be thought of as spreading the cost of US tariffs onto China’s trading partners, which are themselves likely to devalue in something of a currency war. The Australian dollar has fallen through 68 US cents, a low not seen since the global financial crisis.

Asian economies are also likely to devalue, among them South Korea, Vietnam, Thailand and Indonesia. The European Central Bank has also signalled rate cuts and other measures to bring down its exchange rate as has the Bank of Japan.

Other nations will devalue…

The US Fed itself will be under pressure to cut rates further in what the Pacific Investment Management Company has warned
could lead to a “full-blown currency war with direct intervention by the US and other major governments/central banks to weaken their currencies”.

On Tuesday Australia’s Reserve Bank signalled its willingness to cut interest rate again, although in our case the drop in the Australian dollar might have made it nervous. It would prefer a controlled rather than unpredictable decline in the dollar.

John Connally Jr, Richard Nixon’s treasury secretary, once said in 1971 that the US dollar was “our currency, but your problem”. He meant that the rest of the world had to live with whatever the US did for its own reasons.

…meaning none of them will win

As the currency of the world’s second largest economy increasingly moves to the centre of global trade, China is able to say much the same thing. But an international currency war could hurt China as well by endangering the still not complete international recovery from the global financial crisis.

The People’s Bank of China has tried to reassure the world that it “has experience, confidence and capacity to maintain renminbi exchange rate at a reasonably stable equilibrium”.

It might do more for confidence if it wound down its control, as have other countries, relying less on manipulating the exchange rate for strategic reasons.




Read more:
What China wants: 3 things motivating China’s position in trade negotiations with the US


The Conversation


Hui Feng, ARC Future Fellow and Senior Research Fellow, Griffith University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Australia depends less on Chinese trade than some might think



Australia is vulnerable to any downturn in global markets due to a Chinese economic slump. But being dumped as a supplier by China is a different matter.
http://www.shutterstock.com

James Giesecke, Victoria University; Nhi Tran, Victoria University, and Robert Waschik, Victoria University

China now buys almost a third of Australia’s exports – about twice the value bought by second-placed Japan, and about nine times fifth-placed United States.

It’s a situation that sparks fears of a Chinese economic slowdown, or a backlash if we offend China’s government in some way, such as by criticising its actions in Xinjiang or in the South China Sea.

In February and March customs officials in Chinese ports reportedly held up Australian coal imports. This was interpreted as a signal from Beijing about moves in Canberra to limit Chinese influence in Australia.




Read more:
The Chinese coal ‘ban’ carries a significant political message


The Chinese government has a track record of using economic muscle to apply diplomatic pressure, including against Canada, South Korea and Palau.

“We are incredibly dependent on China – in some ways we are a state of China,” said business commentator Robert Gottliebsen. “China is now the world’s number two country and they will not stand for being lectured to by anyone — let alone a minnow like Australia.”



Is Australia really that dependent on China?

As a commodity exporter, Australia is vulnerable to any downturn in global markets due to a Chinese economic slump. This makes the fallout from the US-China trade conflict concerning.




Read more:
What’s worse than the US-China trade war? A grand peace bargain


But being penalised as a supplier by China for some perceived diplomatic slight is a different matter.

Using a global economic model with many commodities and countries, we modelled the effect of Beijing permanently cutting China’s imports of Australian coal by 25%.

Australia’s coal exports to China in 2018 were worth about A$15 billion – or about 1% of what the nation spends on private and public consumption in a year.

One might think losing a quarter of coal exports to China will knock about 0.25% off our spending capacity. In economic terms that’s a big number. Our results, however, point to a much smaller loss – just 1/6th the impact, or about 0.04% lower national consumption. That equates to every person having $24 less to spend in a year.

Four determining factors

Any economic model necessarily abstracts from potentially important real-world elements, so its potential accuracy depends on the detail and data that goes into it.

So perhaps more important than the specific results of a cut to coal exports is how our modelling shows four interconnected factors determine to what degree the economy will be hurt by sanctions on any export.

The first factor has to do with the capacity to redirect exports to other markets. How easily can exporters find other buyers? How much will the price need to be cut to interest buyers? We call these “trade diversion effects”.

If Australia could not divert exports elswehere, China buying 25% less coal would see the volume of total Australian coal exports fall by about 6%. Our modelling shows the likely fall would be about 1/12th of this, at 0.5%.

The chart below shows our results. The blue line shows the effect on the total value of coal exports. The stacked columns show the effect of China’s cutback being offset by sales to other markets – notably Japan, South Korea and countries in Southeast Asia.



To sell more to another buyer, it’s likely exporters will need to reduce prices. Our model anticipates the Australian coal price will fall by about 3%.

The second factor is how easily resources can switch from coal production to other activities.

For any resource that can move to alternative uses, the impact of the trade sanction will be reduced. Labour is an example. A miner no longer needed to meet demand for coal will generally have skills transferable to other jobs, although this might require working at a lower wage in another region.

For any resource that cannot easily move – the capital invested in specific coal-mining equipment or transport infrastructure, for example – lower export revenue will mean lower profits from these assets.

How do lower profits affect Australian living standards? This depends on who owns the affected assets, and how much tax they pay.

So the third factor is the level of foreign ownership. More foreign ownership means more profits go overseas. This dampens any impact of lower profitability on Australian living standards.

For our modelling, we set foreign ownership of the coal industry at 80%, based on Reserve Bank of Australia estimates and an analysis of mine ownership in New South Wales coalfields. With just 20% of the after-tax profits staying in Australia, the impact of any change is minor.

The local economy, however, can also suffer due to lost taxes on the income of those foreign owners.

Taxation effects are the fourth factor.

Australian governments collect taxes through mining royalties (a tax on the value of production), corporate tax (on profits), and withholding tax (on interest and unfranked dividends).

We set the coal royalty rate at 8% of the value of coal production, and the taxation rate on foreign capital at 17% because the effective tax rate on foreign capital is about half the corporate tax rate.

A smaller cost than some think

With all these factors in play, our modelling suggests there is less to fear
from the Chinese government throwing its economic weight around than some think.

We think our conclusions probably hold for many of Australia’s exports to China, but acknowledge our investigation is preliminary.

For example, what would happen if the Chinese government decided to restrict the number of Chinese students studying in Australia? Finding new markets for education services might be tougher than for primary products. Resource redeployment might be easier, however.




Read more:
The world has a hard time trusting China. But does it really care?


Notwithstanding these caveats, this type of modelling could provide a clear framework to assess Australia’s economic vulnerabilities.

Perhaps no price should be put on upholding and expressing our liberal democratic and human rights values, and protecting our security interests, but the cost of economic sanction might well be less than many fear.The Conversation

James Giesecke, Professor, Centre of Policy Studies and the Impact Project, Victoria University; Nhi Tran, Senior Research Fellow, Victoria University, and Robert Waschik, Associate Professor and Deputy Director, Centre of Policy Studies, Victoria University

This article is republished from The Conversation under a Creative Commons license. Read the original article.